City wants residents to bank on it

Program to help 5,000 without checking or savings accounts

A recent study found that 5,000 Gaithersburg residents stow their money at home, just like Charles Herman Rabbitt, a wealthy city landowner who died in 1972.

Legend has it that the wealthy landowner did not trust banks, and he buried his money in milk cans. After his death, more than $540,000 in cash and $250,000 in silver coins were found on his property, according to county historians. Another $70,000 was found buried in milk cans in the 1970s, said Assistant City Manager Tony Tomasello, who believes the tale holds a valuable lesson.

Research by the PEW Charitable Trusts, done at the city's request, recently found that an estimated 5,000 residents do not have checking or savings accounts. Drawing on an idea he saw at a conference, City Councilman Ryan Spiegel has spearheaded an initiative to help residents open bank accounts at Gaithersburg banks, so they can better protect their finances and build the credit histories they need for long-term financial stability. The city's goal is to keep their dollars moving in the local economy.

Details for the program are expected to be announced this week. Spiegel has said he hopes to make the system easy to use for immigrants and low-to-moderate income residents who may otherwise face roadblocks. Outreach could take on a dual mission — alerting prospective bank clients to tax credits and other opportunities available, Spiegel said. Some "unbanked" residents came to the U.S. from countries where banking systems could not be trusted, he said.

Residents who store money in their homes risk losing it through theft, fire or natural disaster. They also risk personal safety by keeping with too much cash on their person.

Such folks also pay a premium for cashing checks, officials noted in a grant application sent to the National League of Cities' "Bank on Cities" Program.

Gaithersburg is one of eight cities selected to participate in the program, which will allow city officials to network and track progress with officials in other cities involved, including: Bryan, Tex.; Denver; Indianapolis; Louisville, Ky.; Newark, N.J.; Rapid City, S.D., and St. Petersburg, Fla. Cindy Hines, a city official coordinating Gaithersburg's effort, plans to draw on past experiences in San Francisco, San Antonio, Tex., and Evansville, Ind., where programs have been implemented.

At Check Cash Depot in Olde Towne Gaithersburg, fees run 1 percent for up to $1,000 cashed, 1.5 percent for $1,000 to $2,000, 2 percent for $2,000 to $3,000 and so on, said Carmen Reyes, a store worker.

Those fees could be better used, said Spiegel.

City officials recently met with representatives from eight banks and six nonprofits, and found the prospects of creating a coalition promising, Tomasello said. Banks representatives said some residents may be stymied from opening accounts by lack of proper identification, lack of credit, trust issues, fear of overdrafts and language barriers.

"It's expensive," said Jose Perez, 29, a laborer standing with friends outside Gaithersburg Check Cash at 211 N. Frederick Ave. The construction worker, who has lived in the U.S. for 10 years and Gaithersburg for five years, said he has no bank account because he has no visa. He saves his money at home and uses a credit card when he is strapped for cash, Perez said.

"We have jobs, we're trying," Perez said, saying he would like full-time employment, residency and more solid finances.

Banks showed varying identification requirements for opening basic no-cost starter accounts, Tomasello said. Some accepted a variety of identifications, including the Mexican Matricula Consular Card, while other had more stringent requirements.

"Not having a lot of money shouldn't be a reason to not have a bank account," said Spiegel, "In fact, it should be a reason to have a bank account. You want to keep your money safe and you want it to grow interest."